Ok, so now before we are stable in the housing market comes another interruption to our teettering market- THE FEDERAL RESERVE- IT’S EASY MONEY POLICIES( WHICH NEVER HAVE REALLY AFFECTED US, ARE GOING TO SOONER THAN WE THINK) Remember, money put into the market ,serves the public like money spent into the market- causing false demand, except or course for, housing, because their isn’t any demand at all. No jobs, no increase in disposal income, no consistant friendly government policy, to calm the fears of consumers. I am one of the consumers and also an employer, who has to deal with more and more red tape, tighter lending policies, and less real interest in buying a home to add wealth. A few investors are still out there, but that has tapered off also- so whats left now?
The Fed will probably raise short term interest rates( this may or may not affect us dramacaticaly at first) by trying to reduce $2 trillion of treasury securities on its balance sheets. But…
It will be hard to make the overnight bank lending rate to go up–p.s. why? so much money in circulation. Easy money from the government makes false short term jobs, extra bank funds available and other monetary funds,(not from spending consumers) but given from the government in excess. This excess has to be paid back someway( how about inflation) increase in cost of goods sold- more taxation, more banking fees, and so on.
The Fed already has a lot of debt-$1.3 trillion long term treasury debt-$9.34 billion (from our home ownership lending)or backed mortgages. Officials want to reduce this, but ha ha- they took away a lot of other lending sources. They practically own all sources of money to lend, from Fanny Mae and Freddie Mac, if you have heard of those terms. No more small community banks, Mortgage brokers, limited mortgage bankers and less companies for competition. The government put their own regulations on our ability to borrow.
Inflation, however unfortunate, may be our friend for now- this will be carefully monitored. If we feel like it is under control, then it probably is and beware- watch rates go up , be prepared-
Watch for a change in the EXACT verbage, from “short term rates will remain low for an extended period” to “we are monitoring the progress on the economic uptrend” that really means, they will raise interest rates because they see the economy strengthening, for example.
Rates can go up so fast- that is- car loans, credit lines, borrowing costs to name a few.
The Federal Reserve policies most likely will have to change to accomodate the new situation in the economy. The current policies haven’t helped HOUSING improve! It hasn’t helped jobs! It certainly hasn’t stablized gas prices or groceries. This is what concerns everyone about our current policies- not just a few elitists. Where is the help for the working bloak? So as a normal working individual getting by, be aware of what the FED does and says in the next couple weeks! Education, not ignorance, is the key to financial stability in rough times.